Exelon Corp. makes big wind energy purchase

Utility will pay $900 million for John Deere Renewables

By

SteveGelsi

NEW YORK (MarketWatch) -- Exelon Corp. on Tuesday said it would push further into the wind energy business in a $900 million deal with Deere & Co., as the operator of the largest fleet of nuclear plants in the U.S. looks to boost its emission-free generation portfolio.

Exelon
EXC, +2.05%
said it will buy John Deere Renewables from Deere & Co
DE, -0.29%
owner of 735 megawatts of wind energy projects now operating in eight U.S. states - enough to power up to 220,000 households.

Shares of Exelon rose 0.5% to $40.72. Deere advanced 0.5% to $63.27.

Chicago-based Exelon also gets rights to pursue 1,468 megawatts of new wind projects in development, including 230 megawatts in an advanced launching stage.

Before this acquisition, Exelon was already the largest wholesale marketer of wind energy east of the Mississippi, with 352 megawatts of wind power capacity from five wind projects in Illinois, Pennsylvania and West Virginia. Exelon Power also owns and operates a 10-megawatt solar plant in Chicago, which the company bills as the largest urban solar plant in the U.S.

Deere plans to take an after-tax charge of approximately $25 million in its fourth quarter results as part of the deal.

Exelon will finance the transaction using Exelon Generation debt.

While the size of the transaction amounts to little more than 3% of Exelon's market cap of $26.8 billion, it ranks as a major deal in the U.S.'s budding wind energy business.

Exelon Chairman and CEO John Rowe said the deal will help the company as more states pass rules to require emission-free generation. Meanwhile, on the national level, wind energy advocates are pushing for a renewable energy standard from the federal government.

"We expect to see increasing demand for clean, efficient wind power at a national level and in the 29 states that already have a renewable energy standard," Rowe said. "This acquisition gives Exelon a strong position in the wind generation business that adds diversity to our generation fleet and provides more options for future growth."

Meanwhile, Deere & Co. Chairman and CEO Samuel Allen said the deal will help it to "sharpen its strategic focus" around its core equipment business around the globe.

Exelon expects to close the transaction with John Deere Renewables in the fourth quarter of 2010.

The transaction comes after Exelon's stated desire to help the energy industry consolidate. Last year, Exelon abandoned plans to buy NRG Energy
NRG, +3.21%
after a hostile takeover attempt. In 2005, federal regulators approved a deal for Exelon to buy Public Service Enterprise Group
PEG, +1.07%
but the deal fell apart on opposition from New Jersey regulators and citizen groups.

Exelon will fold Deere Renewables into Exelon Power division of Exelon Generation. The company currently holds more than 1,000 megawatts of owned and contracted renewable power, including hydroelectricity, wind, landfill gas and solar.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.